What Is the Objective of the Disclosure Framework Project?

The objective of the Disclosure Framework project is to improve the effectiveness of disclosures in notes to financial statements by clearly communicating the information that is most important to the users of financial statements. The framework is intended to promote consistent decisions by the Board about disclosure requirements and guide reporting organizations when making disclosure decisions.

The Disclosure Framework project comprises the following two components:

THE BOARD’S DECISION PROCESS. The Board’s decision process is intended to help the Board improve its own procedures and promote consistent decision-making when determining disclosure requirements.

THE ENTITY’S DECISION PROCESS. The entity’s decision process is intended to guide reporting organizations when they are making decisions about which disclosures are relevant for their particular circumstances.

The proposal explains what information should be considered for inclusion in notes by describing the purpose of notes and general limitations, and then more directly addressing the nature of the appropriate content. An item that may be considered for disclosure by the Board because of the decision process will not automatically become a required disclosure. The Board and its staff will continue to evaluate the costs and benefits associated with each potential disclosure.

The Board is testing those concepts against four Topics: fair value measurement, defined benefit plans, income taxes, and inventory.

What Are the Recent Developments of the Entity’s Decision Process?

The FASB is concluding initial deliberations related to promoting the use of discretion by reporting entities when evaluating the requirements as set forth by the Board. The main provisions would draw attention to the role materiality plays in making decisions about disclosuresContinue to Entity's Decision Process Project Page

What Are the Next Steps?

The FASB will be issuing a two exposure documents: one about the use of materiality by reporting entities and the other amending the Concepts Statement’s definition of materiality. The Board is continuing to evaluate the board’s decision process in the context of the four Topics being reviewed, which include: fair value measurement, defined benefit plans, income taxes, and inventory.